Fuel Shortages and Rising Ingredient Prices Squeeze Bangladesh's Restaurant Industry as Operating Costs Climb

Bangladesh's restaurant business has been expanding alongside urbanisation, changing lifestyles and a growing tendency to eat out. From the capital to district and upazila towns, food shops, fast-food outlets, cafes and restaurants of many kinds have sprung up. Alongside young entrepreneurs, large business houses are also investing in the sector.

Yet even as the business grows, entrepreneurs are under pressure from operating costs, fuel shortages, rising raw material prices, tax and VAT complications and shrinking consumer spending.

According to the Bangladesh Bureau of Statistics (BBS) hotel and restaurant survey of 2021, the number of food-serving establishments in the country was 436,274. The number had almost doubled in a decade. Around 2.1 million people worked in those establishments. The survey counted tea stalls alongside restaurants, fast-food shops and other food businesses.

However, it could not be confirmed whether a full survey of the same kind has been published since 2021. The report therefore notes that the old figures cannot be treated as a picture of the current market.

Operating costs have risen in step with the expansion. When the prices of meat, fish, rice, oil, vegetables and other food items needed to run a restaurant go up, the cost of preparing food rises too. Added to that are staff wages, shop rent, electricity, gas and LPG costs.

As a result, pressure is building on one side to raise food prices, while on the other side traders fear that higher prices will drive customers away.

The Bangladesh Restaurant Owners' Association has identified rising operating costs, the fuel crisis, complications in approvals from regulatory bodies and falling customer spending as the sector's major challenges. According to the organisation, an entrepreneur has to take approvals from several government agencies to open a restaurant, a process that takes a long time and extra money. LPG supply, new gas connections and tax-VAT issues have also become causes of concern for traders.

Competition in the restaurant business has also intensified. Especially in the capital and big cities, where several restaurants have opened in the same area, entrepreneurs have to emphasise food quality, taste, environment, price and service to attract customers. Online ordering and food delivery have changed the nature of the business, but the commissions and delivery costs attached to those services have created extra pressure for small entrepreneurs.

Another important challenge for the sector is ensuring food safety and a hygienic environment. If proper rules are not followed in food storage, cooking, serving and the use of safe water, health risks are created for consumers. The report says regular monitoring of restaurants, staff training and hygienic food preparation therefore need emphasis.

Overall, Bangladesh's restaurant business is promising, but for its sustainable growth it is essential to reduce entrepreneurs' operating costs, simplify the approval process, ensure fuel supply and strengthen food-safety monitoring. A supportive policy framework for small and medium entrepreneurs could also help the restaurant industry play a bigger role in job creation and in the growth of the country's service sector.